PepsiCo (PEP) Q3 2026 earnings summary

Executive summary

• Q3 net revenue rose 5.6% to $25.274B; organic revenue growth accelerated to 3.1%, its fastest pace since Q4 2023, with organic volume growth across global beverages and convenient foods.

• International strength offset North American pressure; North American convenient-food trends improved sequentially, while further action on growth, execution and costs remained a priority.

Financial highlights

• Q3 organic revenue growth of 3.1% included 1.7 percentage points from acquisitions net of divestitures and 0.7 points from FX translation.

• Reported operating profit rose 19% to $4.260B and diluted EPS increased 17% to $2.23; core operating profit grew 3% and core diluted EPS rose 2% to $2.34.

• Q3 operating margin was 16.9%, up 195 bps; core operating margin was 16.9%, down 35 bps on inflation and higher marketing investment, partly offset by pricing and productivity.

• Q3 tariff refunds totaled $178M and partly offset cost pressures; reported operating profit also benefited from acquisition- and divestiture-related items and commodity-derivative gains.

• Global beverage volume rose 3%; global convenient-food volume increased 1%, or 4% excluding South African commodity-oriented businesses.

Outlook and guidance

• FY2026 organic revenue growth is guided to ~3% and net revenue growth to ~6%, including ~1.5 points each from FX and acquisitions net of divestitures.

• FY2026 core constant-currency EPS growth is guided to +1% to +2%, core EPS growth to +2.5% to +3.5%, and the core effective tax rate to ~21%.

• FY2026 capital spending is expected below 5% of net revenue, with free cash flow conversion of at least 80% and shareholder returns of $8.9B.

• North American core operating margin is expected to remain pressured in Q4; productivity, operational excellence, cost controls and revenue-management actions are intended to mitigate pressure.

• 2027 priorities include faster, more efficient North American growth, continued international momentum and disciplined costs and capital allocation; fuller expectations are due in February.